De Villiers NO and Another v BoE Bank Ltd. (477/2002) [2003] ZASCA 133; [2004] 1 All SA 481 (SCA) (28 November 2003)

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De Villiers NO and Another v BoE Bank Ltd. (477/2002) [2003] ZASCA 133; [2004] 1 All SA 481 (SCA); 2004 (3) SA 459 (SCA) (28 November 2003)

THE SUPREME COURT OF APPEAL
OF SOUTH AFRICA
Reportable
Case no: 477/2002
In
the matter between:
MICHAEL
DE VILLIERS, N.O.
First Appellant
BRIAN
BASIL NEL, N.O.
Second Appellant
and
BOE
BANK LIMITED
Respondent
_______________________________________________________
Coram
:
Howie P, Streicher, Navsa
JJA
and
Van Heerden AJA
Date of delivery:
28 November 2003
Summary: Application to alter
costs order after judgment ─ principles discussed and applied.
____________________________
___________________________
J U D G M E N T
_______________________________________________________
NAVSA JA:
[1] This application for the
amendment of a costs order follows on a judgment of this court on 26
September 2003. The applicants,
BOE Bank Limited (‘the bank’)
instituted action in the South Eastern Cape Local Division against
the respondents, joint liquidators
of Intramed (Pty) Ltd (in
liquidation). The claim, which was the subject of the appeal in this
Court, was based on three loan agreements
each of which contained
clauses entitling the bank in the event of litigation to recover
costs on an attorney and client scale.
[2] An area of dispute between the
parties was the question of whether the loan agreements and the
underlying securities had been
authorised by Intramed (Pty) Ltd
(Intramed). The court below held that the liquidators were liable to
the bank on the three loan
agreements and that the bank’s claims
were secured by underlying securities. An order in those terms was
thus made. This Court
whilst agreeing that the agreements and the
underlying securities had been authorised, held (Heher JA dissenting)
that the loan agreements
had lapsed because of non-fulfilment of a
suspensive condition in each of the loan agreements. We held that the
bank was entitled
to the restitution of monies advanced in pursuance
of the now lapsed agreements and made an order to that effect. The
practical effect
of the order was that the amount due to the bank was
less than the amount that would have been due in terms of the loan
agreements.
[3] In making the related costs order
this Court recorded the following in paragraphs [82] and [84] of its
judgment:
‘
[82] The cost order made by the Court below was based
on the terms of the loan agreements which provided for attorney
client costs
against the party in breach. The lapsing of the
agreements renders the provisions in question inoperative.
. . .
[84] The degree of success attained by the appellants is
insufficient in the overall picture to carry costs of appeal. It was
not
argued that it should…’
[4] In respect of the underlying securities the following was stated
at paragraph [83]:
‘
It has not been suggested that, in
the event that the underlying securities were held to be authorised,
the liquidators would not
be bound by them.’
The documents constituting the securities were part of the record and
featured during the trial and the appeal.
[5] Because the Court below had held the liquidators liable on the
loan agreements it had ordered them to pay the bank’s costs
on the
attorney client scale. For the reason set out in para [82] of our
judgment referred to above we set aside that costs order
and
substituted it as follows:
‘
The defendants are ordered to pay the plaintiff’s
costs of suit including the costs of two counsel.’
[6] The bank now applies to have the costs orders in this Court and
in the Court below amended to include costs on an attorney client
scale. The bank contends that, since the documents constituting the
underlying securities provide that, in the event of it exercising
its
rights in terms thereof, it shall be entitled to recover any costs
incurred on an attorney client scale, it is entitled to costs
in
those terms. The bank contends further that had the relevant clauses
in the security documents been brought to the attention of
this
Court, costs would have been awarded on the scale now contended for.
It is submitted that the issue of costs on this basis was
not dealt
with in argument and that it is proper for this Court to alter or
supplement its order. In this regard reliance is placed
on the
decisions in
Estate Garlick v Commissioner For Inland Revenue
1934 AD 499
at 503,
Firestone South Africa (Pty) Ltd v Gentiruco
A.G.
1977 (4) SA 298
(A) at 306G-308A,
Thompson v South
African Broadcasting Corporation
[2000] ZASCA 76
;
2001 (3) SA 746
(SCA) and
Mostert N.O. v Old Mutual Life Assurance Co (SA) Ltd
2002 (1)
SA 82
(SCA). In the
Mostert
and
Thompson
cases the
principles enunciated in the
Firestone
case were discussed and
applied.
[7] The general well-established rule is that once a court has duly
pronounced a final judgment or order, it has itself no authority
to
correct, alter or supplement it - it becomes
functus officio
.
[8] In the
Firestone
case at 306H-308A, after a reference to
the
Estate Garlick
case, four exceptions to the rule are spelt
out and dealt with.
I repeat them and consider their applicability:
The principal judgment or order may be supplemented in respect of
accessory or consequential matters, for example, costs or interest
on the judgment debt, which the court overlooked or inadvertently
omitted to grant.
This exception does not apply as the question of costs was considered
and dealt with. When the fourth exception is dealt with the
extent to
which the parties made submissions on the issue of costs in their
heads of argument and in oral argument will become clear.
A court may clarify its judgment or order, if, on a proper
interpretation, the meaning thereof remains obscure, ambiguous or
otherwise
uncertain, so as to give effect to its true intention,
provided it does not thereby alter the ‘sense and substance’ of
the
judgment or order.
This exception is clearly inapplicable. The relevant orders and the
motivations for these are unambiguous.
A court may correct a clerical, arithmetical or other error in its
judgment or order so as to give effect to its true intention.
Again this exception does not apply. The order does not contain an
error of the kind envisaged. This Court’s true intention is
clear
from the terms of the order and as set out in its motivation.
Where counsel has argued the merits and not the costs of a case but
the Court, in granting judgment also makes an order concerning
costs, it may thereafter correct, alter or supplement its order. The
reason for this exception is that, in such a case, the court
is
always regarded as having made its order with the implied
understanding that it is open to an aggrieved party subsequently to
be heard on the appropriate order.
In order to decide the applicability of this exception the facts set
out in the paragraphs that follow deserve closer scrutiny.
[9] In its heads of argument in the appeal the bank stated the
following (at para 73):
‘
[If] the Court was to find for the plaintiff on the
basis that the loan agreements lapsed and the parties were obliged to
restore
to each other what they received the only difference in the
relief sought would be in respect of the amounts to be paid and the
time
from which interest would run. . .’
This paragraph would seem to imply that costs should also be awarded
on an attorney client scale as this was the basis on which costs
were
sought in the event of the loan agreements being upheld. However,
two paragraphs later, in the ultimate paragraph of the bank’s
heads
of argument entitled ‘Conclusions’, the following appears:
‘
75. In the circumstances we submit that the appeal
should be dismissed with costs on the scale as between attorney and
client, including
the costs consequent upon the employment of two
counsel.
The loan agreements provide that costs are payable on
this scale.
’
(emphasis added).
[10] In this paragraph the bank does not rely on the provisions of
the underlying securities. It relies solely on the loan agreements
in
support of its contention that it is entitled to costs on the scale
as between attorney and client. The liquidators adopted the
position
that the loan agreements and the underlying securities were
unauthorised. They thus submitted, in the final paragraph of
their
heads of argument, that the appeal should be upheld with costs,
including the costs of two counsel, and that the appropriate
order in
the Court below would be that the plaintiff’s claim be dismissed
with costs including the costs of two counsel.
[11] During oral argument in the appeal the Court enquired from
senior counsel for the liquidators whether he conceded that in the
event it was held that the loan agreements had lapsed, the bank would
be entitled to restitution of amounts paid over by the bank.
Counsel
for the liquidators responded by conceding that the bank would be
entitled to an order in those terms plus costs. When later
referred
to this concession counsel for the bank confirmed that this would be
the appropriate order. He did not submit that the bank
would be
entitled to costs on a higher than the usual scale.
[12] In the
Thompson
case the fallacy that unless something is
dealt with during oral argument, the matter can be reopened and the
court can amend its
judgment in respect thereof was dealt with. At
749H-I
the following appears:
‘
The Court is entitled to base its judgment and to
make findings in relation to any matter flowing fairly from the
record, the judgment,
the heads of argument or the oral argument
itself. If the parties have to be forewarned of each and every
finding, the Court will
not be able to function.’
[13] As shown, the question of costs, whether in relation to the loan
agreements being upheld or in relation to a finding that they
had
lapsed, was addressed. That it may not have been addressed as
elegantly or as impressively as counsel might, with hindsight,
consider desirable is of no consequence for present purposes.
[14] In the
Firestone
case the following appears at 307H-308A:
‘
But, of course, if after having heard the parties on
the question of costs, either at the original hearing or at a
subsequent hearing
…the Court makes a final order for the costs,
there can be no such “implied understanding” and such an order is
immutable (subject
to the preceding exceptions) as any other final
judgment or order. . .’
[15] There can be no doubt that the question of costs on the basis
that the loan agreements had lapsed was addressed.
[16] Against this background there can be no question of an implied
understanding that, subsequent to the hearing, an aggrieved party
could approach this Court to be heard on an appropriate order as to
costs. In these circumstances we are
functus officio
and our
order is immutable.
[17] Counsel for the liquidators submitted that the application
should be dismissed with costs including the costs of two counsel.
This is not a matter that warrants the costs of two counsel.
[18] In light of the conclusions reached I make the following order:
The application is dismissed with costs.
_________________
MS NAVSA
JUDGE OF APPEAL
CONCUR:
HOWIE P
STREICHER JA
VAN HEERDEN AJA